The Relation Between Financial Reporting Transparency And Earnings Management

• Main Authors: Li-Hsueh Huang, 黃力學
• Other Authors: Wann-Cherng Wang
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/70215669651141048160

碩士 === 國立成功大學 === 會計學系碩博士班 === 96 === Prior studies indicate that greater transparency in financial reporting formats is capable of detecting earnings management. The recent research hypothesizes and substantiates that greater transparency in disclosure of comprehensive income discourages managers from engaging in earnings management in the field of increased transparency. In this experiment, 91 graduate students in institutes of accountancy, and finance and banking choose which available-for-sale security to sell from a portfolio. By projecting these results on managers in related careers, I try to find out which step they would take when facing similar situations, and provide reference for accounting standard setters. This study manipulates the transparency of comprehensive income reporting and the relation between projected earnings and consensus forecasts in a 2 by 2 between-subjects design. Whether projected earnings are below or above consensus forecasts, participants, on average, tend to sell securities that increase earnings. However, more transparent comprehensive income format doesn’t significantly reduce both income-increasing and income-decreasing earnings management. All participants indicate that if a company was using techniques such as realized gains (losses) from available-for-sale securities to manage earnings, it would be moderately obvious to statement readers, and its effects on the company’s stock price and its reputation for reporting integrity are moderate, and not different significantly between the less and the more transparent conditions.